SHARES in Schroders, one of the last remaining independent British merchant banks, soared 11 per cent along with other fund management groups on takeover speculation after the Prudential's successful bid for unit trust manager M&G Group. The pounds 1.9bn price is one of the highest ever paid for a fund company.

"These fund management groups are rare and valuable assets," said Chris White, at Johnson Fry Asset Management. "It's good news for the sector." Management fees charged by UK equity unit trusts are about twice as high as the average fee of US stock funds. But fund managers are under increasing pressure from the Government and index funds to slash their fees.